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The Role of Owner in Capital Structure Decisions: An Analysis of Single-Owner Corporations

Author

Listed:
  • James Ang

    (Florida State University)

  • Rebel Cole

    (DePaul University)

  • Daniel Lawson

    (Gonzaga University)

Abstract

This study examines the extent to which individual demographic characteristics of owners influence capital structure desisions. Using the Federal Reserve's 2003 Survey of Small Business Finances, we estimate the joint effects of traditional capital structure determinants and manager age, gender, education, business experience, sophistication, and wealth on the capital structure of single-owner corporations. By calculating the marginal contribution of personal risk tolerance, we demonstrate that owner preference contributes meaningfully to the explained variation in capital structure decisions.

Suggested Citation

  • James Ang & Rebel Cole & Daniel Lawson, 2010. "The Role of Owner in Capital Structure Decisions: An Analysis of Single-Owner Corporations," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 14(3), pages 1-36, Fall.
  • Handle: RePEc:pep:journl:v:14:y:2010:i:3:p:1-36
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    References listed on IDEAS

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    Cited by:

    1. Jain, Pawan & Jiang, Christine & Mekhaimer, Mohamed, 2016. "Executives' horizon, internal governance and stock market liquidity," Journal of Corporate Finance, Elsevier, vol. 40(C), pages 1-23.
    2. repec:wsi:rpbfmp:v:20:y:2017:i:04:n:s0219091517500229 is not listed on IDEAS
    3. Huiyu Li, 2015. "Leverage and Productivity," Discussion Papers 15-015, Stanford Institute for Economic Policy Research.
    4. Susan Coleman & Carmen Cotei & Joseph Farhat, 2016. "The debt-equity financing decisions of U.S. startup firms," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(1), pages 105-126, January.
    5. Susan Coleman & Carmen Cotei & Joseph Farhat, 2016. "The debt-equity financing decisions of U.S. startup firms," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(1), pages 105-126, January.
    6. Joel M. Vanden, 2016. "Optimal capital structures for private firms," Annals of Finance, Springer, vol. 12(2), pages 245-273, May.

    More about this item

    Keywords

    Capital Structure; Risk Tolerance; Owner Preference; Entrepreneurship;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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